Rick's Cabaret International, Inc. reports first quarter 2014 results, provides second quarter 2014 update and reaffirms guidance
HOUSTON – February 10, 2014 – Rick’s Cabaret International, Inc. (NasdaqGM: RICK) today announced results for the 2014 first quarter ended December 31, 2013, while also providing an update on sales growth experienced to date in the second fiscal quarter (ending March 31, 2014) and reaffirming previous guidance for Fiscal 2014.
“With the exception of the impact of unusually severe winter weather in mid-December in our important Texas markets, results are progressing according to plan with our gentlemen’s clubs and restaurant/sports bars,” said Eric Langan, President and CEO of Rick’s Cabaret International.
“Revenues at our Rick’s Cabaret and Vivid Cabaret New York clubs in New York City were excellent in January and early February, as we capitalized strategically and financially on the pro football championship game this year across the Hudson River in New Jersey.
“In addition, we continue to be engaged in a program to maximize the value of our extensive real estate, and overall we look forward to strong growth in Fiscal 2014.”
First Quarter 2014 Summary
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First quarter 2014 revenues of $29.4 million increased 8.4% from $27.1 million in the year ago period. First quarter 2014 results were negatively impacted by severe ice storms in mid-December in Texas, a state representing approximately 75% of the Company’s units and generating approximately 50% of sales.
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Rick’s earned $2.4 million, or $0.25 per diluted share (on a GAAP basis), compared to $2.6 million, or $0.28 per diluted share, in the corresponding year ago period. The weather is estimated to have resulted in approximately $500,000 in lost sales of which approximately 80% would have contributed to operating profit.
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First quarter 2014 results were also impacted by planned expenses associated with the development of five units (adult gentleman’s clubs Vivid Cabaret in New York City and Rick’s Cabaret in Odessa, TX, and Bombshells restaurant/sports bars in Webster, Beaumont and Austin, TX).
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Despite the above factors, the cash generating power of Rick’s remained strong. Adjusted EBITDA* for the first quarter of 2014 was $7.3 million, approximately level with the year ago period.
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The Company had 41 units open during the first quarter of 2014, including nine open less than a year.
Second Quarter 2014 Update
Second quarter 2014 sales as of the end of last week were up strongly compared to the year ago period due to:
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Opening of Vivid Cabaret New York in mid-January and a second Bombshells, in Webster, TX, in late January.
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An overall beneficial effect from the February 2, 2014 professional football championship.
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Continued seasoning of new adult clubs and restaurant/sports bars open less than a year.
“We had a terrific success due to The Big Game this year,” said Mr. Langan. “It truly was a non-stop party at both the Vivid and Rick’s clubs in New York. Based on this, we expect continued success when the Big East and NCAA Regionals college basketball championships come to New York City in March.”
FY14 Guidance Reaffirmed
-
Rick’s reaffirmed its fiscal 2014 guidance of approximately $130 million in revenue, $1.70 earnings per share non-GAAP, and $1.20 earnings per share GAAP, based on a continued strong performance company-wide from existing units over the balance of the year, plus contributions from new restaurant/sports bars already opened and those planned to open.
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Plans for the balance of the fiscal year include the expected opening of a new adult club (Rick’s Cabaret in Odessa) and three new Bombshells currently under development (Beaumont, Austin and South Houston).
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Rick’s expects to have a total of 10 sports bar/restaurants open or in development by year end calendar 2014, with a cluster in Texas and others possibly outside the state in select cities having significant tourist and convention traffic.
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Rick’s FY14 guidance does not assume the acquisition of any gentlemen’s adult clubs, although they are factored in the Company’s longer term multi-year target of 20-30% revenue growth.
Conference Call
A conference call to discuss Rick’s results for the first quarter of 2014, outlook and related matters will be held today, February 10, 2014 at 4:30 PM Eastern Time.
Meet Management
Eric Langan, President and CEO, invites investors for a “Due Diligence Ball” to meet, talk and tour one of the Company’s major clubs, tonight in Manhattan.
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When: Monday, February 10, 2014, 6:30 PM to 8:00 PM ET
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Where: Rick’s Cabaret New York, at 50 W. 33rd Street, between Fifth Avenue and Broadway
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RSVP: With your contact information, to gary.fishman@anreder.com
*Explanation of Non-GAAP Financial Measures
In addition to our financial information presented in accordance with GAAP, management uses certain “non-GAAP financial measures” within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. We monitor non-GAAP financial measures because it describes the operating performance of the company and helps management and investors gauge our ability to generate cash flow, excluding some recurring charges that are included in the most directly comparable measures calculated and presented in accordance with GAAP. Relative to each of the non-GAAP financial measures, we further set forth our rationale as follows:
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Non-GAAP Operating Income and Non-GAAP Operating Margin. We exclude from GAAP operating income and GAAP operating margin amortization of intangibles, patron taxes, gains and losses from asset sales, stock-based compensation charges, litigation and other one-time legal settlements and acquisition costs. We believe that excluding these items assists investors in evaluating period-over-period changes in our operating income and operating margin without the impact of items that are not a result of our day-to-day business and operations.
-
Non-GAAP Net Income and Non-GAAP Net Income per Basic Share and per Diluted Share. We exclude from GAAP net income and GAAP net income per diluted share and per basic share amortization of intangibles, patron taxes, income tax expense, impairment charges, gains and losses from asset sales, stock-based compensation, litigation, loss from discontinued operations and other one-time legal settlements and acquisition costs, and include the Non-GAAP provision for income taxes, calculated as the tax effect at 35% effective tax rate of the pre-tax non-GAAP income before taxes less stock-based compensation, because we believe that excluding such measures helps management and investors better understand our operating activities.
-
Adjusted EBITDA. We exclude from GAAP net income depreciation expense, amortization of intangibles, income tax, interest expense, interest income, gains and losses from asset sales, acquisition costs, litigation and other one-time legal settlements and impairment charges because we believe that adjusting for such items helps management and investors better understand operating activities. Adjusted EBITDA provides a core operational performance measurement that compares results without the need to adjust for Federal, state and local taxes which have considerable variation between domestic jurisdictions. Also, we exclude interest cost in our calculation of Adjusted EBITDA. The results are, therefore, without consideration of financing alternatives of capital employed. We use Adjusted EBITDA as one guideline to assess our unleveraged performance return on our investments. Adjusted EBITDA is also the target benchmark for our acquisitions of nightclubs.
About Rick’s Cabaret
With 43 units, Rick’s Cabaret International, Inc. (NasdaqGM: RICK) is the leading hospitality company operating adult gentlemen’s clubs and sports bar/restaurants in the US. Adult clubs in New York City, Los Angeles, Miami, Philadelphia, Charlotte, Dallas/Ft. Worth, Houston, Minneapolis, Indianapolis and other cities operate under brand names such as “Rick's Cabaret,” “XTC,” “Club Onyx,” “Vivid Cabaret,” “Jaguars” and “Tootsie’s Cabaret.” Sports bar/restaurants, which also feature live entertainment, operate under the brand names “Bombshells” and “Ricky Bobby Sports Saloon.”
For More Information
Forward-looking Statements
This press release may contain forward-looking statements that involve a number of risks and uncertainties that could cause the company’s actual results to differ materially from those indicated in this press release, including the risks and uncertainties associated with operating and managing an adult business, the business climates in cities where it operates, the success or lack thereof in launching and building the company’s businesses, risks and uncertainties related to the operational and financial results of our Web sites, conditions relevant to real estate transactions, and numerous other factors such as laws governing the operation of adult entertainment businesses, competition and dependence on key personnel. Rick's has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.
Media & Investor Contacts
Gary Fishman and Steven Anreder at 212-532-3232 or gary.fishman@anreder.com and steven.anreder@anreder.com
RICK'S CABARET INTERNATIONAL, INC.
Consolidated Statements of Income
|
|
|
Three Months Ended
|
|
|
|
|
December 31,
|
|
|
(in thousands, except per share data)
|
|
2013
|
|
|
2012
|
|
|
|
|
(UNAUDITED)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Sales of alcoholic beverages
|
|
$
|
11,689
|
|
|
$
|
10,406
|
|
|
Sales of food and merchandise
|
|
|
3,423
|
|
|
|
2,578
|
|
|
Service revenues
|
|
|
12,730
|
|
|
|
12,655
|
|
|
Other
|
|
|
1,581
|
|
|
|
1,502
|
|
|
Total revenues
|
|
|
29,423
|
|
|
|
27,141
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
3,747
|
|
|
|
3,386
|
|
|
Salaries and wages
|
|
|
6,577
|
|
|
|
6,038
|
|
|
Stock-based compensation
|
|
|
3
|
|
|
|
282
|
|
|
Other general and administrative:
|
|
|
|
|
|
|
|
|
|
Taxes and permits
|
|
|
4,416
|
|
|
|
4,221
|
|
|
Charge card fees
|
|
|
428
|
|
|
|
374
|
|
|
Rent
|
|
|
1,228
|
|
|
|
570
|
|
|
Legal and professional
|
|
|
908
|
|
|
|
641
|
|
|
Advertising and marketing
|
|
|
1,285
|
|
|
|
1,109
|
|
|
Depreciation and amortization
|
|
|
1,390
|
|
|
|
1,320
|
|
|
Insurance
|
|
|
799
|
|
|
|
499
|
|
|
Utilities
|
|
|
595
|
|
|
|
489
|
|
|
Other
|
|
|
2,431
|
|
|
|
2,278
|
|
|
Total operating expenses
|
|
|
23,807
|
|
|
|
21,207
|
|
|
Income from operations
|
|
|
5,616
|
|
|
|
5,934
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest income and other
|
|
|
77
|
|
|
|
8
|
|
|
Interest expense
|
|
|
(2,012
|
)
|
|
|
(1,643
|
)
|
|
Gain on change in fair value of derivative instruments
|
|
|
-
|
|
|
|
(1
|
)
|
|
Income from continuing operations before income taxes
|
|
|
3,681
|
|
|
|
4,298
|
|
|
Income taxes
|
|
|
1,323
|
|
|
|
1,584
|
|
|
Income from continuing operations
|
|
|
2,358
|
|
|
|
2,714
|
|
|
Loss from discontinued operations, net of income taxes
|
|
|
(1
|
)
|
|
|
(14
|
)
|
|
Net income
|
|
|
2,357
|
|
|
|
2,700
|
|
|
Less: (net income) loss attributable to noncontrolling interests
|
|
|
47
|
|
|
|
(53
|
)
|
|
Net income attributable to Rick’s Cabaret International, Inc.
|
|
$
|
2,404
|
|
|
$
|
2,647
|
|
|
Basic earnings (loss) per share attributable to Rick’s shareholders:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.25
|
|
|
$
|
0.28
|
|
|
Loss from discontinued operations
|
|
|
(0.00
|
)
|
|
|
(0.00
|
)
|
|
Net income
|
|
$
|
0.25
|
|
|
$
|
0.28
|
|
|
Diluted earnings (loss) per share attributable to Rick’s shareholders:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.25
|
|
|
$
|
0.28
|
|
|
Loss from discontinued operations
|
|
|
(0.00
|
)
|
|
|
(0.00
|
)
|
|
Net income
|
|
$
|
0.25
|
|
|
$
|
0.28
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
9,546
|
|
|
|
9,575
|
|
|
Diluted
|
|
|
9,855
|
|
|
|
9,833
|
|
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
Non-GAAP* measures for the quarters ended December 31, 2013 and 2012
(in thousands)
|
|
For the Quarter Ended
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
Reconciliation of GAAP net income to
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
GAAP net income attributable to Rick’s shareholders
|
$ 2,404
|
|
$ 2,647
|
|
|
Income tax expense
|
1,323
|
|
1,584
|
|
|
Interest expense and income and gain on derivative
|
2,012
|
|
1,644
|
|
|
Litigation and other one-time settlements
|
120
|
|
-
|
|
|
Acquisition costs
|
-
|
|
55
|
|
|
Loss from discontinued operations
|
1
|
|
14
|
|
|
Depreciation and amortization
|
1,390
|
|
1,320
|
|
|
Adjusted EBITDA
|
$ 7,250
|
|
$ 7,264
|
|
|
Reconcilation of GAAP net income (loss) to
|
|
|
|
|
|
|
non-GAAP net income
|
|
|
|
|
|
|
GAAP net income attributable to Rick’s shareholders
|
$ 2,404
|
|
$ 2,647
|
|
|
Patron tax
|
738
|
|
891
|
|
|
Amortization of intangibles
|
89
|
|
131
|
|
|
(Gain) loss on change in fair value of derivative instruments
|
-
|
|
1
|
|
|
Stock-based compensation
|
3
|
|
282
|
|
|
Litigation and other one-time settlements
|
120
|
|
-
|
|
|
Income tax expense
|
1,323
|
|
1,584
|
|
|
Acquisition costs
|
-
|
|
55
|
|
|
Loss from discontinued operations, net of income taxes
|
1
|
|
14
|
|
|
Non-GAAP provision for income taxes
|
(1,636)
|
|
(1,863)
|
|
|
Non-GAAP net income
|
$ 3,042
|
|
$ 3,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
Non-GAAP* measures for the quarters ended December 31, 2013 and 2012
(in thousands, except per share data)
|
|
For the Quarter Ended
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
Reconciliation of GAAP diluted net income
|
|
|
|
|
|
per share to non-GAAP diluted net income per share
|
|
|
|
|
|
Fully diluted shares
|
9,855
|
|
9,833
|
|
|
GAAP net income attributable to Rick’s shareholders
|
$ 0.25
|
|
$ 0.28
|
|
|
Patron tax
|
0.07
|
|
0.09
|
|
|
Amortization of intangibles
|
0.01
|
|
0.01
|
|
|
(Gain) loss on change in fair value of derivative instruments
|
-
|
|
0.00
|
|
|
Stock-based compensation
|
0.00
|
|
0.03
|
|
|
Litigation and other one-time settlements
|
0.01
|
|
-
|
|
|
Income tax expense
|
0.14
|
|
0.16
|
|
|
Acquisition costs
|
-
|
|
0.01
|
|
|
Loss from discontinued operations, net of income taxes
|
0.00
|
|
0.00
|
|
|
Non-GAAP provision for income taxes
|
(0.17)
|
|
(0.19)
|
|
|
Non-GAAP diluted net income per share
|
$ 0.31
|
|
$ 0.39
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP operating income to
|
|
|
|
|
|
non-GAAP operating income
|
|
|
|
|
|
GAAP operating income
|
$ 5,616
|
|
$ 5,934
|
|
|
Patron tax
|
738
|
|
891
|
|
|
Amortization of intangibles
|
89
|
|
131
|
|
|
Stock-based compensation
|
3
|
|
282
|
|
|
Litigation and other one-time settlements
|
120
|
|
-
|
|
|
Acquisition costs
|
-
|
|
55
|
|
|
Non-GAAP operating income
|
$ 6,566
|
|
$ 7,293
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP operating margin to
|
|
|
|
|
|
non-GAAP operating margin
|
|
|
|
|
|
GAAP operating income
|
19.1%
|
|
21.9%
|
|
|
Patron tax
|
2.5%
|
|
3.3%
|
|
|
Amortization of intangibles
|
0.3%
|
|
0.5%
|
|
|
Stock-based compensation
|
0.0%
|
|
1.0%
|
|
|
Litigation and other one-time settlements
|
0.4%
|
|
0.0%
|
|
|
Acquisition costs
|
0.0%
|
|
0.2%
|
|
|
Non-GAAP operating margin
|
22.3%
|
|
26.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RICK'S CABARET INTERNATIONAL, INC.
|
|
Reconciliation of GAAP Earnings Guidance To
|
|
Non-GAAP Earnings Guidance
|
|
Fiscal Year Ending September 30, 2014
|
|
Reconciliation of GAAP diluted net income
|
|
|
|
|
per share to non-GAAP diluted net income per share
|
Low
|
|
High
|
|
GAAP net income
|
$ 1.20
|
|
$ 1.51
|
|
Patron tax
|
0.33
|
|
0.33
|
|
Amortization of intangibles
|
0.04
|
|
0.04
|
|
Income tax expense
|
0.65
|
|
0.81
|
|
Acquisition costs
|
0.01
|
|
0.03
|
|
Loss from discontinued operations, net of income taxes
|
(0.01)
|
|
(0.02)
|
|
Non-GAAP provision for income taxes
|
(0.78)
|
|
(0.95)
|
|
Non-GAAP diluted net income per share
|
$ 1.44
|
|
$ 1.76
|